What are the strategies that have been outlined by Nasscom for
1999-2000 for the Indian software industry?
While we are entering the next millennium, we can feel satisfied that
we have almost realized our targets and achieved the strategy of an
initial phase of growth in software and service industry in India. We have
started putting in place a strategy for the next phase of growth for our
industry.
We strongly believe that contrary to many other predictions, the post
Y2K scenario is much more brighter for Indian software exports, then the
revenues generated from opportunities in Y2K. For example, out of the
total software exports of US $2.65 billion during 1998-99, only about 20
per cent of the revenue came from Y2K solutions. But, post-Y2K will bring
us revenues from e-commerce solutions, IT enabled services, euro
solutions, Interactive integration, ERP services and "fall-outs"
from Y2K etc.
Our current strategy is to continue the reap of benefits in legacy and
`client-server’ export markets; make a dashing entry into e-commerce
solutions and IT enabled services and seed for software products and
original IPR. To describe this strategy, we are currently reaping the
harvest of work done by our software professionals as far as legacy
systems, client-server systems are concerned and we are doing good
offshore / onsite, remote maintenance work. The next step of seeding is to
create software products and packages and grow rapidly into IT enabled
services, e-commerce solutions, web based technologies and then provide
(in not so distant future) into the whole area of interactive
architecture, which is a combination of legacy systems alongwith
e-commerce solutions. This kind of strategy for exports would continue to
see that we get more than 50 per cent growth every year and that we can
much faster realize our $50 billion software export target by 2008.
However, as far as domestic market is concerned, there is lot of work
to be done to create a continued growth rate. For example, just now our
concentration is very high on banking, defence and government, which means
we want government to computerize, banks to computerise and defence and
industry to collaborate.
We recently organised a conference `IT@BANK.COM’, which was a huge
success. The Chief Vigilance Commissioner (CVC) has issued guidelines that
70 per cent of banks should be computerised by 2001. These guidelines are
really helping us. Such an action would translate to lot of domestic
market computerisation. The other promising segment is government i.e.
e-governance. The National IT Taskforce has recommended 1-3 per cent of
government spending should be towards computerisation and we can already
see that happening. These two segments alone can give us lot of growth
rate in domestic market.
Apart from these, there are certain other markets, which are moving
fast, such as the SOHO market. In these segments, we are working for
Internet and e-commerce proliferation. There are other manufacturing
segments which are getting computerised because of adopting to e-business
strategies.
What according to you are the three most important factors that will
help India achieve the $50 billion target by 2008?
According to me, the most important factor will continue to be the
people and vendor sophistication from India. Our professionals continue to
be one of the best in the world.
The first factor would be to continue to strengthen global brand equity
for the Indian software industry. We have to continue to create new
markets informing them about the success stories and reaching out to new
users while retaining the existing ones.
The second would be constant removal of bottlenecks in policies and
assist to create proactive policies by Government of India so that
interference by government can be reduced and a free and nurturing
environment can be created.
The third would be India’s strategy to keep in pace with the global
IT demands and state-of-the-art technologies, so that we are ahead of
others. Whether it is IT enabled services, e-commerce solutions, knowledge
management - whatever may be the new trends, it is imperative that India
keeps ahead with these technologies.
The fourth factor would be that we increase our pace for good
infrastructure in the country. This essentially means good telecom
infrastructure and others.
During the beginning of this decade, some of the primary aims of
Nasscom were to get governmental support and duty exemptions. How far do
you think Nasscom has been successful in getting the support of the
government? The lack of government spending on IT is still considered as
one the major factors towards limited growth of hardware in the country?
What do you think is the future role of Nasscom in the growth of software
industry in India?
I agree with your assessment that one place where Nasscom has really
succeeded is its lobby efforts with the government. On the contrary, in
1991, when I used to say, we are a lobby group, people used to take
offence. How can you call an association a lobby group? But we were
honest. We were not lobbying for something that was a vested interest. We
were lobbying for something that was good for the entire industry, good
for the country as well as good for the people of the country. That is the
philosophy at Nasscom. We do not lobby for something that is only good for
the industry, but is not good enough for the country or the people of our
country.
For example, high duties on software were bad for the industry,
country, as well as for users. We lobbied for zero duty on software and we
got that. There are some people in other industries who want higher duties
because they want to protect themselves. With higher duties you do not
benefit the country because even the revenues generated are not high. On
the other hand the growth rate diminishes. Secondly, high duties do not
benefit the people of the country because they have to pay more for the
same products. That is why in software we wanted zero duty.
At the same time, we also realized that if we cannot compete with
multinationals in our own country, there is no way we can compete with
them globally. If you notice that from 1991 our track record has been very
strong in reducing government interferences, making their policies
pro-active etc. For example in 1991, we lobbied and made Government of
India introduce Section 80 HHE included in the Income Tax Act. This
allowed profits from software exports to be exempted from income tax. In
the same year, we lobbied with VSNL / STP and got high-speed datacom links
and that has been the magical formula for doing offshore software
development. The high speed 64 kbps and above (even 2 mbps) has helped to
increase offshore development as a delivery model for software exports.
Then the whole scheme of STP and software development in EOU / EPZ, which
we lobbied for, so that it is easier to do software development in the
country. And then various schemes like EPCG Scheme, Special import licence
schemes and so on. We also effectively lobbied with government for changes
in Copyright Act and that has been another factor for growth in the
software industry. It was our continuous efforts, which brought zero duty
on software in 1997, from a high of 114 per cent in 1991.
Now as far as government spending is concerned, we lobbied with the
National IT Task Force in 1998, and today the Government has issued
guidelines that 1-3 per cent Government department spending should be
towards computerisation. We are now working pro-actively with many state
governments to create IT policy and more implementation through public
procurement policy. You will soon see high spending towards IT in
government.
What are the effects of software piracy in India and how do you see
that changing in the next five years?
We believe that litigation is not the only way to curb software
piracy. It was in 1992, that we realized that Indian Copyright Act was not
sufficient to protect intellectual property rights in India or to
encourage Indians to create original IPR in the country. We lobbied with
the government for changes in the Copyright Law. Although, the government
at that stage, wanted to understand as to why we wanted these changes - as
they thought it would benefit only the overseas companies. We said, maybe
initially it would, but in the long run it would encourage Indians to
create their own IPR. The government saw our point and in 1994, the
copyright act was amended. On 10 May 1995 it was enforced.
We have been measuring the levels of software piracy every year since
1995 and this has continuously come down. Software piracy in 1994 for
example, was 89 per cent. In 1995 it was brought down to 78 per cent.
Later in 1996 it was came down to 73 per cent; In 1997 it was down to 68
per cent, 1998 — 63 per cent and 1999 — 60 per cent. In next five
years, our target is to have the least amount of software piracy in the
world as far as percentage is concerned. USA today has the least amount of
software piracy, which is at 27 per cent. Our aim would be to have piracy
at an even lower rate than the US rate and ultimately aim for zero piracy.
With regard to software piracy in India, has Nasscom been successful in
changing the mindset of users? Who do you think does the responsibility
lie in reducing piracy?
Of course, as I mentioned it is not only that we are facilitating
police raids, we are also organizing seminars, talking to companies /
government officials explaining to them, as to what constitutes software
piracy and why they should not indulge in the same. To some extent, we
have changed the mindset. However, much more work needs to be done. Of
course in some people, there is a need to put the fear of arrest in their
mind.
What future programs have you chalked out for anti-piracy?
We have a lot of ongoing programs like our anti-piracy hotline at
Delhi. Organization of software management seminars to educate people;
training for specialized police and judiciary so that they understand the
nuances of software piracy.
Our future plans include many other activities. We are also working
with the government towards a scheme through which every EDP manager in a
government department or PSU will verify and sign a statement that
according to him / her, no pirated software is being used in his/her
department and he/she would see that no such pirated software will be
used. When a government officer signs such a statement, it carries a lot
of meaning.
The second is that we are working with software companies to allow site
licences or corporate licences which will allow people to manage their
software better. We also have plans to see that computer training
institutes in the country only use legal software.
Also, our anti-piracy hotline is soon expected to be a toll free
hotline, wherein the callers can report suspected cases of software
piracy; they can ring up from any place in the country and will not have
to pay for it; they can enquire as to where to buy original software. We
are also working with various state governments to create IPR cells in
various state governments and police departments etc.
What are the conclusions of the e-commerce survey that was conducted by
Nasscom?
Through our e-commerce survey in July 1999, for the first time we
could find out the actual volume of e-commerce transactions in the
country. Our survey indicated that in 1998-99, the total e-commerce
transactions in the country was Rs 131 crore. To some this may sound high
or low, but if one understands the lack of infrastructure or regulatory
framework in our country, then in such conditions. this seems to be quite
a reasonable figure.
However, we believe that if the e-commerce laws or the `Information
Technology Bill’ gets approved by the parliament and the infrastructure
really grows as it has been envisaged, especially with private ISPs being
allowed their own gateways - then e-commerce can really grow,
exponentially.
In such a situation, we strongly believe that by end of next three
years, annual e-commerce transactions can exceed Rs 10,000 crore. Moreover
in 2002, the software industry has a great chance to earn more than $ 1
billion annually out of software exports in providing e-business solutions
and maybe about Rs 3,000 crore from the domestic market in providing
e-business solutions. So the bottlenecks are the infrastructure and the
regulatory framework and then e-vyapar is really going to take off in this
country.
How do you see call-centres picking up in India? What is its potential
in India?
Because of many factors like availability of large number of English
speaking graduates and high quality of people, infrastructure coming up in
pockets, the Indian ability to be multilingual and relatively low costs,
call-centres are fast emerging as a major opportunity for India.
Government of India has recently announced new guidelines for call centres.
Though much more work needs to be done there. I feel that call centres
will help create lot of employment in the country.
In 2008 we are expecting about 1,00,000 people to be employed in the
call center industry with a revenue of 6,000 crore as against 1,400 people
and a revenue of Rs 40 crore in 1998.
Do you see Nasscom promoting call-centres?
Yes definitely. We had organised the first Indian conference on `IT
Enabled Services’ at New Delhi in May 1999. This conference was attended
by more than 800 people. Again, we lobbied with the government and made
them announce "call centre" guidelines which allowed call
centres to operate and this included international centres, as well as
domestic call centres. However, these guidelines although initiate a new
beginning but are not comprehensive and still do not address all the
bottleneck issues. So, we are lobbying with government for comprehensive
guidelines.
We are also organizing workshops and conferences to train people and
tell entrepreneurs about the avenues of business. We are also scheduling
conferences / buyer-seller meet at USA, where we facilitate networking
between companies that need call centres and companies than have / can
set-up call centres. NASSCOM has now opened a very strong IT Enabled
Services Division provides consultancy on Call Centres, Medical
Transcription, Content development etc.
Do you see a shift in software exports from the US to Europe?
No, I do not think it is a question of software exports. Our market is
growing very strongly by more than 50 percent every year, so we are always
looking for new market opportunities. In 1991, when our exports were close
to 100 million dollars, almost 95 per cent was exported to USA and 5 per
cent to Europe.
In 1998-99, when we have exported software and services worth $2.65
billion dollars, almost 23 per cent was exported to Europe and 60 per cent
to USA. This does not mean that there has been a shift in market. Exports
to USA have increased from $95 million to almost $1.7 billion in eight
years. The growth has been phenomenal, but at the same time, in Europe the
growth has been from $5 million in 1991 to almost $500 million in 1998.
So, Europe has a lot of potential, but USA would remain the star and
biggest market for all of us. But our efforts in Europe are paying good
dividends now and we are seeing good growth rates in this market also.
Which are the software segments that the European market might find
attractive from India?
It is difficult to generalise, but I would say that in near future the
segments may include - Euro solutions, E-commerce solutions, ERP services,
IT Enabled services, interactive architecture (e-commerce solutions
through legacy systems).
How many international events has Nasscom taken part / proposes to take
part during this year? What are the advantages in such participations?
Well, we not only take part in international events, but we also
create our own international events. For example, we regularly participate
in three regular international events every year. These included
COMDEX/Fall at Las Vegas in November, GITEX at Dubai in October and CebIT
Fair at Hannover, Germany in March.
Apart from this, we take delegations to various events. We create
"Software India Seminars", which is a combination of conference
and buyer-seller meet. This year, we have organised eight `Software India’
seminars. This year, we are also organising Nasscom’s IDEAS tour to USA,
wherein we will take a delegation of young start-up companies with
innovative products / ideas and are making them meet investors, bankers,
angel investors, venture capitalists, take them to NASDAQ, NYSE etc. Now,
we are also expanding our Software India Seminars in Korea, Japan,
Australia, South Africa, apart from Middle East, Europe and USA. We have
recently signed MoUs with Israel, Korea and other countries.
These events are major brand equity creation exercises and directly
bring export orders to the participating companies. We also do
advertorials for various international magazines like Business Week,
Forbes and Fortune.
What are the obstacles in India for software exports? When do you think
these will be overcome?
I think, in our country, while we keep removing obstacles, new ones
also get created. There is a constant work to remove bottlenecks and
problems. I do not think there is one stage which is ideal, where all
bottlenecks will be removed. However, at this stage, majority of
bottlenecks have been removed. However some of the issues which need to be
resolved are :
- Global parity in tariff and infrastructure of telecom / internet is
required.
- Physical bonding of equipment in Software Technology Parks / EOU/ EPZ
needs to be removed.
- Indian Telegraph Act 1885 needs to be changed so that Internet
telephony is allowed.
- More coordinated work by Government of India at WTO for getting
trade-related visas abd movement of natural persons.
- Removal of non-tariff trade barriers etc.
Some of the IT companies pursue the practice of taking software
professionals on contract. Very frequently these software engineers break
the contract, seeking greener pastures, causing lot of friction with the
employers. What is your opinion on this issue? We understand that the
Supreme court had already declared such contract null and void. Do you see
Nasscom playing any role in this issue?
Well, we strongly believe in democracy. Every person has a right to
join or leave a company. But, at the same time, there are certain code of
conducts or ethics, like when a person joins a company, he / she should
not leave till the responsibility they have been assigned is completed or
handed over to a new person, which is probably execution of a contract or
a milestone. These are sort of good understandings which need to be
created between the employer and the employee and Nasscom respects that.
On the contrary, a code of conduct at Nasscom is that one company will
not induce a person from another member company to join them. However, if
he / she applies, it is another matter. As far as people leaving the
company and migrating overseas is concerned, ours is a democratic country.
Brain drain will happen till we create great opportunities in the country.
That is the reason, we have been lobbying with the government and with
opportunities increasing in the country, we also see "reverse brain
drain" happening. We believe strongly in democratic code of conduct
to be followed and some kind of conduct between employers and employees,
wherein neither employers get harassed nor employees are put into problem.
The growth in Internet subscriber base has seen no significant
improvement during the last few months despite the advent of the private
ISPs. What are the reasons for it? Have we reached a saturation level
already? When do you think the sudden boost would be observed?
Here, I feel the ISP policy has not yet been fully implemented. We
just have private ISPs getting their licences. However, one important
bottleneck is bandwidth. The private ISP still have to go through the
monopoly service provider. And same is situation with basic service
provider, which in most states is monopoly. So this needs to be sorted
out. Now that government has announced the policy so that private ISPs can
set up their own international gateways, this will remove many
bottlenecks.
Also, Internet through cable TV is yet another shining example,
although the quality of cable might not be good in many places, things are
bound to change. Entrepreneurship would take its lead here. India
currently has only 3.2 million base of installed PCs, whereas we have 37
million cable TV connections. I feel in India the leapfrogging of Internet
would be more through TV than just PCs.
When are the cyber laws expected to be ratified? Is it sensible for the
industry to wait for the ratification to jump into e-commerce in India?
Take the example of `Rediff-on-the-net’. It is doing e-business even
without `cyber laws’. Cyber laws which is mainly the `Digital Signature
Act’ gives a sort of security to consumers when they do e-business
transactions with a credit card. But B2B transactions can still take
place. However it is better to quickly enact cyber laws in our country. I
feel the winter session of Parliament will see lot of action and we will
have cyberlaws in place by December 1999.
It is believed that the Indian consumers, who have not gone through
legacy technologies of consumerism, may find it difficult to accept
e-commerce directly? Your comment.
I do not agree with this. On the contrary, the Indian consumer is
extremely price sensitive, extremely savvy and understands what he / she
is doing. Look at www.bababazaar.com - a simple portal in Delhi has done
in selling groceries and vegetables over the Internet and people have
adopted to it. I was in Rajkot which is in Saurashtra in Gujarat, and
people are doing e-matka there. Sheetal and Roopam the departmental
stores are selling their saris and suits over the net. The examples are so
many. I think it is advantageous that we did not computerise so much in
the last 15-20 years. For this, the first advantage is that we do not have
so much of Y2K problem. In next five years, I feel India would be at the
forefront of e-commerce. We actually adapt very fast, if we want to. And
today, people of my country do want to make her a superpower.